The US Dollar has emerged as the top performed for the second consecutive day (at the time this report was written) amid cooling fears over emerging markets and potential joint military action by the United States, the United Kingdom, and France against Syria.

Whereas stocks and FX had been largely following the performance of US Treasuries the past two weeks, already the past two days there are signs of this relationship slipping. Indeed, even as the US Dollar has rebounded alongside slightly higher US Treasury yields – the 10-year note yield has increased from a low of 2.720% on Tuesday to 2.780% today – investors aren’t treating the move as a sign the world is ending.

Instead, the rebound in US yields suggests that investors are calming down: nervous market participants scrambled back into US Treasuries to start this week. Today, the slight unwinding of US Treasuries is a function of investors being less worried about keeping their capital safe; not QE3 taper speculation.

It is worth noting that trading today could easily flip from ‘the world isn’t so bad’ to ‘the world is ending’ once more, but this time in a beneficial manner to the US Dollar. The second 2Q’13 US GDP report will be released today, and consensus forecasts see growth having improved to +2.2% annualized versus +1.7% prior.

A ‘meet’ or ‘beat’ of this figure (>+2.2%) would put the US economy right on the Federal Reserve’s forecasted growth track, and could jumpstart ‘Septaper’ speculation. A miss here would likely provoke a retrenchment in US yields, and provoking the Dow Jones FXCM Dollar Index to shed its weekly gains.